When it comes to Rivian Automotive (NASDAQ:RIVN) and competition, Tesla (NASDAQ:TSLA) may be what first comes to mind. Yet while many investors are buying RIVN stock in the hopes it is the next TSLA stock, the electric vehicle market leader isn’t this company’s main competitive threat.
Rather, that honor belongs to incumbent automaker Ford (NYSE:F), with its F-150 Lightning EV pickup truck. Ford was an early RIVN investor, at one point owning a 12% stake in the company. Over the past year, however, the venerable automotive company has cashed out of its equity position.
Ford may have reaped billions from its investment, but the question now is whether this upstart will end up having the last laugh. To find out, let’s dive in, and see whether Rivian can still thrive, as its former backer becomes more prominent in the world of EVs.
The Battle Between New School and Old School
When Ford invested $500 million into then-privately-held Rivian back in 2019, it wasn’t merely an equity investment. It was the formation of a strategic partnership. By that point, the Ford Motor Company had committed billions to its solo EV endeavors.
However, as part of the strategic investment, the two companies agreed to collaborate on the development of an EV for Ford, using Rivian’s skateboard platform. That said, the two companies never brought a jointly-developed vehicle to market. Rather, by late 2021, not too long after RIVN stock debuted in the public markets, the partnership came to an end.
Ford’s decision to scrap its collaboration plans largely stemmed from CEO Jim Farley’s confidence that his company, through its own efforts, could “win in the electric space.” From that point on, what started off as an alliance has become a rivalry between the new school and the old school.
This became more apparent during 2022 when Ford began cashing out of RIVN while ramping up production of its EV offerings like the F-150 Lightning. So far winning numerous accolades for the vehicle, according to the company, the F-150 Lightning was the number one selling electric truck in the U.S. during December.
Neck and Neck
Ford’s success with the Lightning in late 2022 has carried over into 2023. During January, Ford sold 2,264 units of this vehicle. Yet while Ford is still crushing it with electric truck sales, Rivian likely isn’t far behind, with sales of its R1T truck.
Although the up-and-coming EV maker has yet to release sales figures for last month, based upon its Q4 2022 delivery numbers, and its ramping up of production, it is likely delivering thousands of this vehicle on a monthly basis at present.
However, will one of these competitors soon pull ahead, or will they remain neck and neck? In my view, count on the latter. Both Rivian and Ford have multiyear backlogs for their respective EV truck models.
Ford has experienced a production shutdown due to a battery fire incident, but this shutdown is likely to be temporary. Ford, like Rivian, intends to vastly ramp up electric truck production this year.
So, shaping up to be similarly-sized competitors in this fast-growing space, this bodes well for RIVN stock, right? Not necessarily. Although the company may be keeping up with its former backer, results in the quarters ahead could still fall short of expectations.
What This Means for the Stock
In my last Rivian article, I argued that “slight misses” could knock RIVN down to lower prices. In other words, an ounce of disappointment could produce a ton of weakness for shares.
Numerous factors could cause this, but the rising popularity of the F-150 Lightning could be a key factor. The base model of Ford’s EV truck offering is not only much less expensive than the R1T, it qualifies for the new U.S. federal EV tax credit.
While perhaps not preventing Rivian from experiencing further growth, it may mean future results fall short of expectations. A clearer picture on this topic will emerge, when the company releases its quarterly results and guidance updates on Feb. 28.
Unless the probability of leaving Ford in the dust starts to really climb, RIVN stock may not be your best truck electrification wager.
On the date of publication, Thomas Niel did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.